The appetite for dollars in Argentina pushes prices to new records

The growing appetite for Dollars Americans in Argentina, fueled by doubts about the weak economy of the South American country, this Thursday pushed the multiple prices of the US currency to new record levels.

The so-called “blue dollar” (informal retail market) reached a new maximum of 200 pesos per unit for sale, although at the end of the day it cut its value to 199 pesos.

Meanwhile, the price of the dollar in the formal retail market, where operations are very limited by various restrictions imposed by the Argentine authorities, advanced 25 cents and also reached a new maximum of 105.25 pesos per unit for sale to the public in the state market. National Bank.

Foreign exchange pressures have been growing in recent days, as the legislative elections of November 14 approach and investors’ doubts about the complex future of the Argentine economy increase.

The strong monetary issue registered since the electoral defeat of the ruling party in the primary elections of last September and the acceleration of the already high inflation in Argentina feed fears among investors of a potential greater devaluation of the peso after the elections next month.

Demand for coverage

Among the more sophisticated investors, hedging operations are also reflected in the prices of the so-called “financial dollars”, which are obtained through the sale of shares and public bonds at prices that this Thursday also broke records: 181 pesos in operations regulated by the Central Bank and 208 pesos in operations agreed between private parties.

Even the price of the wholesale dollar, regulated by the Central Bank and accessed by importers, for example, hit a new maximum of 99.95 pesos on Thursday.

“One week before the elections, as generally happens, people want to be covered against what may happen to the exchange rate after knowing the result,” said Nicolás Chiesa, director of the firm Portfolio Personal Inversiones (PPI).

For the analyst, it seems “difficult” that such a high gap between the different prices can follow and that “uncertainty” generates “a lot of pressure on the different types of dollar these days”.

Central bank in the crosshairs

Investors are not clear when and how Argentina will close a refinancing agreement for its heavy debt with the International Monetary Fund (IMF) or how complex macroeconomic imbalances will be corrected, with high inflation and fiscal problems.

Meanwhile, they look closely at the Central Bank, particularly its levels of issuance of Argentine pesos to assist the Treasury and the loss of monetary reserves due to daily sales of dollars to try to sustain the exchange rate.

According to investment firm Puente, in October the Central Bank transferred 353,000 million pesos (about US $ 3,350 million) to the Treasury, a monthly record level.

Meanwhile, the Central Bank’s total reserves are around US $ 42.6 billion, but its net reserves would be, according to PPI calculations, US $ 3.599 billion, while net liquid reserves (excluding IMF special drawing rights and gold) they would barely be US $ 778 million.

For the economist Gustavo Ber, this daily “drain” of net reserves continues to arouse “growing concerns” among operators, “since it is recognized that the dynamics are not sustainable and thus measures should be adopted after the elections.”

“The references of the freest dollars continue to reflect that the search for coverage of economic agents continues to be the order of the day in the face of the challenges to face on the other side of the 14-N wall,” he observed.